Cases C-89/08 P and C-272/12 P Commission v Ireland and Others: The EU law principles in the Eurallumina saga – Part 1

In the following posts we are going to have a look at the saga of the Eurallumina cases, and in particular the judgments of the Court of Justice in Case C-89/08 P of 2 December 2009 and Case C-272/12 P of 10 December 2013 Commission v Ireland and Others. These judgments touch upon important principles of EU law such as legal certainty, the duty to state reasons, the ability of the EU Courts to raise pleas sua sponte, the right of the parties to be heard, the protection of legitimate expectations and the presumption of legality of EU measures as well interesting issues such as the relationship between tax harmonisation and monitoring of State aid and the separation of powers between the Council and the Commission.

As a preliminary point and for the avoidance of any confusion, it is noted that the judgment in Case C-272/12 P of 10 December 2013 is the second judgment by the CoJ in this case on appeal. The judgment in Case C-89/08 P of 2 December 2009 between the same parties on the same dispute set aside the judgment of the Court of First Instance in Joined Cases T-50/06, T-56/06, T-60/06, T-62/06 and T-69/06 Ireland and Others v Commission and referred the case back to the General Court. The latter court examining the case for the second time issued its judgment in Joined Cases T-50/06 RENV, T-56/06 RENV, T-56/06 RENV, T-60/06 RENV, T-62/06 RENV and T-69/06 RENV Ireland and Other v Commission. This judgment was appealed again to the CoJ, it was set aside by the judgment in case C-272/12 P, and was referred back yet again to the General Court, as we will see below.

In chronological order, we are going to deal with both judgments in Case C-89/08 P and Case C-272/12 P Commission v Ireland and others in two consecutive posts as both judgments are very interesting.

The background to the dispute is linked to the interface between tax harmonisation in the field of excise duties on mineral oils used for the production of alumina and the monitoring of State aid. So, secondary legislation on excise duties on mineral oils (see Directive 92/81/EEC and Directive 92/82/EEC which were repealed by Directive 2003/96/EC taking effect from 31 December 2003) gave the power to the Council, acting unanimously and on a proposal from the Commission, to authorise a Member State to introduce exemptions from or reductions of the excise duties on mineral oils for specific policy considerations. And this is what the Council actually did in respect of Ireland, Italy and France: by a series of Council decisions, these Member States were authorised to apply reduced rates of excise duty or exemptions from excise duty to certain mineral oils since the early ‘90s. These authorisations were extended many times by the Council and ultimately by means of Council Decision 2001/224/EC until 31 December  2006. However, Recital 5 in the preamble to Council Decision 2001/224/EC stated that it was without prejudice to the outcome of any procedures relating to distortions of the operation of the single market that may be undertaken on the basis of the State aid rules or to the duty of the Member States to notify potential State aid to the Commission.

Then, some years later, here comes the Commission to enforce the State aid rules regarding the above authorised (by the Council on proposal by the Commission) exemptions from excise duties on certain mineral oils: the Commission initiated the procedure of Article 88(2) EC in 2001 which was concluded by the contested decision dated 7 December 2005 finding that (a) the said exemptions constituted State aid; (b) this State aid needed to be (partially) recovered for the period between February 2002 and December 2003 and (c) the aid granted between July 1990 and February 2002 was not to be recovered  as this would be contrary to the general principles of Community law. Thus, the Commission took the view that the exemptions constituted new and not existing aid within the meaning of Article 1(b)(v) of Regulation 659/1999 as they did not exist before the entry into force of the EC Treaty in the Member States concerned, they had never been notified and assessed under the State aid rules.

It comes as no surprise that the appellants in this case lodged applications at the General Court for the annulment, in whole or in part, of the aforementioned Commission decision.

So the first time round, the General Court decided not to examine the 23 pleas in law raised by the applicants but to first raise of its own motion a plea relating to the defective statement of reasons on which the Commission decision was based with regard to the finding that the exemptions from the duty constituted new aid (i.e. not existing aid pursuant to Article 1(b)(v) of Regulation 659/1999). It then annulled the Commission decision on that basis. The Commission appealed. Let’s see what the CoJ found:

First, the CoJ in its judgment in Case C-89/08 P Commission v Ireland and Others reiterated its standard case-law regarding the statement of reasons: an absence of or inadequate statement of reasons constitutes an infringement of an essential procedural requirement for the purposes of Article 230 EC. It is a plea involving a matter of public policy which may, and even must, be raised by the Community judicature of its own motion. By raising such a plea of its own motion, the European Courts do not go beyond the scope of the dispute that has been brought before them or in any way infringe the rules of procedure. In this respect, the CoJ concluded that in the present case the Court of First Instance did not exceed its jurisdiction by annulling the Commission decision for an inadequate statement of reasons. Furthermore, the Court of First Instance had not raised a plea regarding the substantive legality of the decision at issue as it had just annulled the contested decision on the grounds that the Commission had not given adequate reasons for the finding that there was no existing aid but instead it had just merely stated that Article 1(b)(v) of Regulation 659/1999 did not apply. Thus, the first ground of appeal put forward by the Commission was dismissed.

Second, in relation to the rights of defence, the CoJ again reiterated its established case-law that the right that the parties must be heard formed part of the rights of defence. This right has to be respected before the European judicature, irrespective of the legal status of the holder of this right, i.e. also European institutions may avail themselves of the right to inspecting and commenting on the evidence and observations submitted to the court. Even more so, the European Courts should respect this rule when they are raising pleas of their own motion: they cannot base their judgments on a plea raised of their own motion without  first inviting the parties to submit their observations on that plea. The CoJ also recalled Article 6 of the ECHR. It thus accepted this ground of appeal because the Court of First Instance annulled the contested decision on the basis of a plea that it had raised of its own motion concerning Article 253 EC without first giving the parties the opportunity to submit their observations on that plea. In doing so, it failed to respect the parties’ (in this case, the Commission’s) right to be heard.

Third, the CoJ, in the interest of the sound administration of justice, continued to examine the other grounds of appeal alleging an infringement of Article 253 EC by the Court of First Instance this time in conjunction with Articles 87(1) EC and 88(1) EC and with the rules governing procedure in respect of State aid. In particular, the Commission argued that it had not been necessary to explain more in detail why the exemptions did not constitute existing aid and that the concept of State aid is objective in nature and thus not dependent on the conduct of statements of the institutions (in other words the institutions may change their appraisal of a measure without giving additional reasoning for the change in their assessment). The issue in this ground of appeal was the following: was the Court of First Instance correct in finding that the Commission should have explained more in detail why Article 1(b)(v) of Regulation 659/1999 was not applicable in the present case?

The CoJ began its reasoning by the recalling the concept of existing aid as a measure which, at the time it was put into effect, it did not constitute an aid, and subsequently became an aid due to the evolution of the common market and without being altered by the Member State. The CoJ makes clear that the phrase “evolution of the common market” needs to be understood as a change in the economic and legal framework of the sector concerned by the measure in question, and it does not apply in a situation where the Commission alters its appraisal on the basis of a more rigorous application of the rules on State aid. Indeed, the concept of State aid corresponds to an objective situation and thus the Commission is not required to state reasons why it made a different assessment of the regime in question in its previous decisions. The CoJ then recalls its established case-law of the concept of the duty to state reasons required by Article 253 EC (see para. 77 of the judgment):

the statement of reasons “must be appropriate to the measure at issue and must disclose in a clear and unequivocal fashion the reasoning followed b the institution which adopted the measure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent Community Court to exercise its power of review”

The CoJ upheld this ground of appeal as well after finding that the Commission had complied with its duty to state reasons and did not need to set out specific explanations on the inapplicability of Article 1(b)(v) of Regulation 659/1999.

In view of the above, the CoJ set aside the judgment of the Court of First Instance and referred the case back to the General Court.

(to be continued)

One thought on “Cases C-89/08 P and C-272/12 P Commission v Ireland and Others: The EU law principles in the Eurallumina saga – Part 1

  1. Pingback: Cases C-89/08 P and C-272/12 P Commission v Ireland and Others: The EU law principles in the Eurallumina saga – Part 2 | EU litigation

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